By Arnav Bandekar, Staff Writer
On October 18, Albertans will be casting a non-binding vote on equalization payments in a referendum. The referendum question comes alongside a barrage of other matters, such as municipal elections, recommendations for appointments to the Canadian Senate, and a second referendum question on whether to keep daylight savings time. With such a deluge of questions, it may be tempting to conclude that the referendum on equalization payments is merely one of many incidental decisions. At stake, however, is how Canadians view the nature of federalism, nationhood, and our obligations to one another. A “yes” vote would empower Albertan Premier Jason Kenney to pursue his plans of securing a “fair deal” for the province within the confederation.
In question is a series of transfer payments to the tune of around $20 billion per year. The federal government pays these transfer payments to less wealthy provinces while obtaining the necessary tax revenue from provinces with greater fiscal capacity. All of this is done to ensure that the standard of living and government services remain relatively uniform across Canada.
Compelling equalization payments is Section 36(2) of the 1982 Constitution Act, which states,
“Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.”
This referendum asks Albertans if the clause should be removed from the Constitution. Since a province cannot unilaterally change the Constitution, the referendum is largely symbolic.
Although that commitment may be laudable for its egalitarian spirit, many Albertans point out that their province disproportionately pays the bill. Of the around $50 billion in federal transfers (of which equalization payments is one), Alberta was a net contributor paying nearly $20 billion, roughly the same as the amount Ontario pays. Note that Ontario, with around 14.6 million inhabitants has more than triple the population of Alberta’s 4.4 million. Meanwhile, Quebec, the biggest net receiver with a population of 8.5 million, takes around $15 billion per year.
On the one hand, these transfers seem like unjust exploitation. Bobby Hristova, of the National Post, decried “The Alberta Burden,” in which “Alberta pays Quebec’s bills.” It is never a cordial situation when one produces for another’s consumption. Similar qualms arise with progressive taxation.
Compounding this attitude, Bill Bewick, executive director of Fairness Alberta, argues that transfer payments only further aggravate Western alienation and is particularly harsh considering Alberta is in its “sixth year of economic hardship” following the 2014 Albertan recession. Looking ahead, unless Alberta diversifies from oil and gas, its economy will face increasing hardship as the government promotes renewables by, for example, imposing a carbon tax.
On the other hand, transfer payments seem to be egalitarian and promote national unity. As Trevor Tombe told the Edmonton Journal, Alberta does not receive payments for the “simple reason that Alberta is in a really good place.” In addition, he elaborated that the payments fulfill the “Canadian commitment to fairness.”
The case of the Maritimes highlights the centrality of equalization payments to the fabric of the Confederation. A significant portion of their provincial budgets are funded by federal transfers. For instance, Nova Scotia, this year, derived 36 percent of its revenue from federal sources. In comparison, Ontario derived 22 percent from federal sources. Historically, the relative underdevelopment of the Maritimes can be traced to a series of economic policies which favoured the nation at the expense of them. As an example, Prime Minister John A. Macdonald’s National Policy of high tariffs in the 1980’s severed their trade ties with the United States and Britain. For the federal government to pursue a national economic policy, it is necessary to compensate the losers to prevent division. With globalization creating new winners and losers, equalization payments may fulfill this role once again.
Intensifying such tensions, Premier Jason Kenney accuses Quebec of failing to reciprocate its obligations. His reasoning is intuitive: Since Alberta sends transfer payments to Quebec for the success of its compatriot, so too should Quebec support Alberta in its endeavours. Yet, Quebec regularly blocks energy projects that would greatly benefit the Albertan economy such as the GNL Quebec and Energy East, with Bloc Québécois Party Leader Yves-François Blanchet bragging that his party single-handedly defeated the latter.
Ironically, the best legal and historical justifications for Alberta’s referendum on the Constitution are Quebec’s nationalist adventures. Alberta is not the first to hold a referendum on changing the constitutional order. Kenney cites Reference re Secession of Quebec, the Supreme Court’s judgement on the legality of the 1995 Quebec referendum on independence. In that ruling, the Court explained that, while Quebec could not unilaterally secede, passing such a referendum would obligate the provinces to negotiate in good faith. Of course, there is debate whether an analogous application exists for Alberta’s referendum, since there is, after all, already a process to amend the Constitution—the Amending Formula.
More than just an expression of approval or discontent with a federal program, the upcoming referendum on equalization allows Albertans to set the tone of the national discourse. They will convey their view on the nature of our confederation and our obligations to one another as compatriots sharing the same nation. With Quebec’s referendums on independence, these questions have been raised before, but they remain unanswered, haunting Canada’s democracy.